General Mills Financial Analysis Harvard Case Solution & Analysis

General Mills Financial Analysis Case Solution


            This paper attempts to analyze the competitive positioning and perform financial analysis for General Mills Company, which is a publicly traded corporation and is listed on New York Stock Exchange. The Company belongs to the Food Processing industry and its three key competitors are Kellogg Company, Seneca Food Corporation, and Kraft Foods. Stock value analysis has been performed by comparing the market value ratios of General Mills with these three competitors in the industry (Horovitz, 2013). The Discounted Cash Flow analysis has also been performed to evaluate the current pricing of the stock. The assessment of the fixed income securities has also been performed and finally, recommendations have been made for the stock of General Mills.

Competition Advantages of General Mills

General Mills Incorporation (Ticker: GIS) is one of the leading marketers and a manufacturer of the branded consumer foods that are sold to its target consumers through the retail stores of the company. The company was founded by Robert Smith and incorporated in the year 1856. The company is headquartered in Minneapolis suburb of the Golden Valley, Minnesota (Weiss, 2014).

There are many well-known brands today, which are marketed by the company such as Great Giant, Pillsbury, Puffs, Cocoa, Colombo, and Betty Crocker. The food products of the company are marketed in more than 100 countries around the world. Most of the products of the company are premium products and thus give the company a pricing power in the market.

Another key competitive advantage for General Mills is its focus on the new and innovative products and also their packaging. Due to huge focus on innovation, the company spends significantly on Research and Development. The R&D expenditure in the year 2015 was around $ 218 million (Foster, 2014). The R&D focuses on driving innovation within its healthier food items and this would thus boost the long-term growth of the company. General Mills also has expertise in effective deal making and this is evident by the recent acquisition of the company of Yoplait, which is ranked as the second biggest brand in the global yogurt market.

In terms of economics, constant dividends are another competitive advantage of General Mills and the company has maintained high retained earnings as compared to the other competitors in this industry. Workforce diversity is also another competitive advantage for the firm; according to the seller’s framework, today’s market places have become more complex, which requires differential thinking (Gray, 2013).

The management of General Mills considers the knowledge of its employees as the most significant core competency of the organization. Overall, General Mills is well positioned in the market against its competitors in terms of its earnings, reduction of carbon footprint, and adherence to corporate governance principles, leadership development, good pricing, innovation, and low price volatility of the company’s stock. The financial statement analysis of the company and its comparison of financial performance against the key competitors and overall industry show that General Mills is financially strong.

Analysis of GM’s Stock Value

            If we analyze the stock value of General Mills Incorporation by comparing the P/E ratio, we can say that although the P/E ratio is low for the company, as compared to Kellogg and Kraft Foods, the P/E ratio is following an upward trend. An upward trend shows that the public has high confidence in the future prospects of the company. The current P/E ratio stands at 25.71 times. However, making a comparison solely on the basis of P/E ratio might be misleading. Therefore, the PEG ratio is a better metric to compare the performance of the companies with different growth rates.....................

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